The television ads promise a glittering future: Give us three years and we will get you your dream job. No high school diploma or GED certificate? No problem. Single mother trying to give your kids a better life? Sign up for classes today.
The standard pitch from the for-profit college industry has become a daytime television commercial staple. Recruiters for new students hang out at high schools, teen job fairs — even homeless shelters.
And it has worked.
Since 2004, the number of private degree- granting institutions has grown from 45 to 76 schools in Colorado, reflecting the popularity of for-profit colleges.
But with that growth have come complaints and lawsuits over recruiting practices, tuition costs and the ability of graduates to land jobs in their fields of study. There also is growing concern in Washington, D.C., about the graduates’ ability — or inability — to repay the millions in federal loans for- profit students take out to pay tuition.
In three years, the state has received 164 student complaints about for-profit schools. The state has revoked authorizations of two for-profit schools and one for-profit vocational school since September.
“This is not dissimilar to what we see in other fast-growing sectors,” said Frederick Hess, education policy director at the American Enterprise Institute, a right-leaning policy think tank. “There is a larger population looking at postsecondary school. Now it’s time to figure out quality control. We need to keep in check the snake oil.”
At times, promises made during enrollment at the for-profit schools are delivered. Graduates make more money than before and are able to pay back the thousands of dollars they often owe in student loans.
Supporters say the industry has crafted an innovative educational model that serves students who aren’t getting what they need from traditional public and nonprofit schools.
In some cases, students would not be accepted at a traditional school or need the highly flexible schedules for-profit schools offer.
“These are students who tend to not have been very successful in academic settings before. They’re intimidated; they’re not sure they can do it,” said Trace Urdan, a financial analyst in San Francisco with Signal Hill who follows the industry.
“At a for-profit school, everybody who works there knows your name. They’re looking out for you. They’re all over you if you don’t go to class. They work really hard to get those students and to get them through the program,” he said.
But a Denver Post examination of graduation rates, loans, default rates and other federal Department of Education data found that on many fronts, for-profit schools as a group underperform their public and nonprofit counterparts.
Among the findings:
• For-profit students are defaulting on their loans at much higher rates than students enrolled in public or private nonprofit schools. Twenty-three percent of students who attended Colorado for-profit schools were in default in the first three years they are required to make payments, according to a Denver Post analysis of 2009 federal Department of Education data.
Adams State College in Alamosa had the state’s highest default rate among four-year public schools at 15 percent.
• Tuition rates are high. Associate’s degrees usually run $30,000 to $40,000, and bachelor’s degrees usually cost between $60,000 and $75,000 at for-profit colleges.
That compares with Metropolitan State College of Denver, where a three-year bachelor’s degree runs about $12,900, and the University of Colorado at Boulder, where the cost is $29,000 for in-state students. At the private, nonprofit University of Denver, a three-year bachelor’s degree costs $148,704.
• Taxpayers are paying for it. Last year, Colorado students received $1.6 billion in federal loans and Pell grants. Of that, $690 million went to for-profit schools, according to an analysis of federal loan data.
• Twenty-five percent of students seeking bachelor’s degrees at for-profits receive their degrees within six years, compared with 55 percent at public colleges and 64 percent at private nonprofit colleges, according to the National Center for Education Statistics.
For-profit schools say they serve a needier student population than most other colleges, which pulls down their graduation rates. Indeed, public schools that serve higher-risk populations, such as Metro State, do not perform any better. Its six-year graduation rate is 22 percent.
• Since 2006, the Colorado Department of Education has received 164 complaints against for-profit colleges — or one for every 214 students attending for-profit schools allowed to collect federal loan dollars. That compares with 178 complaints filed against public colleges — or one for every 1,224 students.
While the complaints themselves are not public, state officials told The Post the complaints against public schools are mostly academic in nature — disputes about grades or professors, for example. Complaints from students attending for-profit schools are consumer in nature, ranging from recruiting practices to lack of transparency about tuition costs and financial aid, according to John Karakoulakis at the state Department of Higher Education.
RECRUITERS PAID TO AGGRESSIVELY ENROLL
Critics say problems often begin the moment potential students reach out to the for-profit college.
Colleges are allowed to compensate admissions representatives based, in part, on the number of students they sign up. Critics say that makes the process less of a counseling session and more of a sales job.
“Whenever you pay someone such as a recruiter based on numbers they bring in, you’re just opening the door for abuse,” said Rich Williams, a higher education associate with the Public Interest Research Group in Washington.
Aggressive recruitment strategies is a key allegation made in a complaint against Westwood College, a Denver-based online and career college, that is now before the American Arbitration Association. The complaint alleges Westwood engaged in “deceptive and illegal trade practices” by failing to disclose the total cost of the education program and misleading potential students about job placement opportunities and the ability to transfer credits to other schools.
Westwood has denied all the allegations and said it trains its employees to be upfront with potential students.
Among the more than 500 people who have contacted the James, Hoyer law firm in Florida about the complaint is Zahra Crowley, who now works for the University of Colorado. In 2007 she was an admissions representative for Westwood.
“It was about reaching your numbers,” she said of the high-pressure sales pitches she delivered on the phone. “They would move you down a pay level if you didn’t make your numbers. . . . Of course we were just worried about that.”
Westwood said recruitment numbers are only one factor influencing compensation — and it is legal.
During the George W. Bush administration, rules that banned compensating admissions representatives at colleges for the number of students admitted were relaxed. All colleges and universities can now make the number of students an admissions rep enrolls part of the salary decisions, but other factors, such as student retention, also must be considered.
Negotiations are underway on proposed federal rules that may once again ban any compensation or gifts based on student enrollment.
Westwood College admissions officer Rick Yaconis said the school would work with whatever federal rules were in place but that current guidelines spell out specific pay- for-performance criteria that are useful.
“Every profession has a way to measure people’s effectiveness,” he said. “If our objective is to recruit qualified students who can impact their lives positively and have the opportunity to be successful in school, we want to find a way to measure that.”
BYPASS HIGH SCHOOL TO START COLLEGEFederal officials also are re-examining another public program bringing high school dropouts to the doors of for-profit colleges.
The Ability to Benefit program allows students without a high school diploma or GED certificate to take a test of basic skills to get into college and collect federal loans and grants to pay for it.
Josh Jurado was drawn to a $15,000 medical program offered by Everest College’s Aurora campus after dropping out of Hinkley High School.
“I called them and I did a little tour. I thought it seemed pretty cool,” he said. “It wasn’t like high school.”
That is what education advocates like about the Ability to Benefit program: It offers another route to higher education for students who do not fit in traditional high schools.
But federal officials have, in recent years, found problems with the testing program, which was created in the early 1990s after investigators found for-profit colleges packing classrooms with students who didn’t have high school diplomas.
In 2008, federal investigators posed as students taking entrance tests at an unnamed for-profit college. A Government Accountability Office report said investigators tried to flunk, but test proctors gave them the answers. Similar problems were found in other investigations.
As a result of the GAO report released last year detailing the abuse, federal officials are considering new rules to ensure test proctors are independent and not receiving any compensation from the college.
“All of these issues are a matter of quality control,” said U.S. Rep. Jared Polis, a Democrat from Boulder who is on the House Committee on Education and Labor. “We want to enhance student access to high-quality programs.”
Federal officials acknowledge they have not kept close track of how many students have been admitted under Ability to Benefit tests or how well they do after they get their diplomas.
Community colleges in Colorado say about one half of 1 percent of their students are admitted under the tests — or 360 of 79,933.
At three Everest College campuses in Colorado, more than 24 percent of the 2,100 students were admitted through the testing program, said Corinthian Colleges vice president Anna Marie Dunlap.
“High school dropouts are a neglected and under-served population,” Dunlap said in an e-mail. “The Federal government set up the (Ability to Benefit) program to provide this population with an opportunity to gain skills that are in demand in the labor market.”
For Jurado, Everest’s medical assistance program seemed perfect. He said he’s learning to administer shots, take care of patients and prepare for a doctor to enter an exam room.
“I’m just hoping to find a good job,” he said.
DEBTS, UNPAID LOANS AFFECT TAXPAYERS TOO
That Jurado gets a good job also matters to taxpayers.
Ninety-four percent of students attending for-profit schools take out a federal loan to pay for it, according to the College Board. That compares with 33 percent of students attending public community colleges and 69 percent of students going to private nonprofit colleges, such as the DU or Colorado College.
Last year in Colorado, students took out $1.4 billion in federal loans to pay for college. Of that, 41 percent, or $573 million, went to for-profit schools, a Post analysis of U.S. Department of Education data found.
The problem: Data show those attending for-profit schools are more likely to default on their loans.
At Everest, 36 percent of students were in default within the first three years of repayment. Dunlap notes the two-year default rate is just 20 percent, below what the government requires, but said the school is working with students to lower the three-year rate.
Among Colorado students attending for-profit schools, about 23 percent were in default on their loans in the first three years of repayment. Among students attending public schools, only 10.4 percent of students were in default in the first three years, according to federal data.
“The issue is really around the abuse of students and the abuse of taxpayer money,” Polis said. “College was designed to help students with their station in life, but (among for-profit colleges) it has instead become an albatross of debt.”
Zarina Musheyeva is so overwhelmed by her debt, she is contemplating walking away from it all.
The 23-year-old graduated with a fashion merchandising degree in 2008 from Westwood College and is more than $60,000 in debt. She got a job as a manager at a department store after graduating, but that wasn’t the job she envisioned for herself and so last year she moved to New York City, stayed with family and tried to break into the fashion industry there.
Though Musheyeva found work as an office manager for a handful of dermatology clinics, she has not figured out how she will make a dent in what she owes. Her payments will reach almost $1,000 a month by the end of the year, and her money problems have ravaged her credit. She can’t get a loan to buy a car.
“I’d have to be a millionaire to pay this,” she said.
Musheyeva is among the students who contacted the lawyers to be part of the arbitration against Westwood.
Westwood notes it works with students to find them work in their field, and in its response to the complaint, Westwood said students know from the start what kind of debt they are accruing to go to college.
“Should we be concerned as a nation that so many low-income students are borrowing a lot of student loans? The answer is yes,” said Lauren Asher, president of the Institute for College Access and Success in Berkeley, Calif. “That much debt can ruin someone’s life.”
In many cases, families of debt-ridden for-profit graduates are unable to help them out. Those attending for-profit schools are among the least wealthy subset of college students, with family median incomes of $24,900. Among students attending public schools, median family incomes are $40,000, according to the federal Government Accountability Office.
ACCREDITATION LEAVES ROOM FOR SURPRISE
Students who do not understand the convoluted differences in accreditation credentials when they enroll at for-profit colleges can be in for a surprise after graduation.
William Tooley — another of the 500 students who have complained about Westwood — started at Westwood College in 2005 with the goal of eventually earning a master’s degree from Colorado State University.
The Fort Collins resident, 38, said that when he enrolled in Westwood’s three-year, $68,380 game software development program, he pressed his admissions representative about whether he could go on to graduate school.
“He assured me. He said he had many, many students who went on to school afterwards,” Tooley said.
Yet both Regis University and CSU have said he wouldn’t likely be accepted to engineering graduate programs because his degree isn’t from a regionally accredited program.
“They look at my piece of paper like it doesn’t count, it doesn’t work,” he said.
That Tooley could have had the impression his degree would be accepted by a regionally accredited school is surprising to Westwood vice president Bill Ojile.
“If you look at the disclosures we give students . . . it’s really hard to understand how someone would walk away thinking, ‘Boy, I want to go to Westwood and if I decide to go to CU, my credits will transfer,” he said.
“We do go to great pains to try and advise students of the unlikelihood.”
Generally, for-profit schools are accredited by national accrediting groups that have a different approach and focus from the regional accrediting groups that most often examine public and nonprofit schools.
Regional groups, which accredit schools such as CSU and Regis, put heavy emphasis on a program’s academics, including the structure of the faculty, the library quality and coursework.
National groups place much of the accreditation emphasis on attendance, graduation rates and job placement, reflecting the for-profit schools’ chief goal of educating students so they can go out and get a job. Accreditors usually require schools get between 65 percent and 70 percent of graduates into jobs “in the field.”
The national accrediting bodies, such as the Accrediting Commission of Career Schools and Colleges, were formed because for-profit schools with their nontraditional structure were not always able to get regional accreditation. That matters because without accreditation, schools can’t access federal loans and grants for their students.
“We’re both recognized accreditors by the U.S. Department of Education. We just have different approaches,” said Karen Solinski, a vice president of the Higher Learning Commission, a regional accreditor that approves about 1,100 schools in the West and Midwest.
David Longanecker, a former assistant education secretary in the Clinton administration, thinks the accreditation process for every school should be more transparent.
Outcomes, such as how much students learned in particular majors or classes, are not public record. Neither are job placement rates.
In a case settled last year, federal investigators alleged the accreditation process was flawed at Westwood College in Texas.
Investigators alleged the school falsely reported its job placement rates and told federal regulators some graduates had jobs at businesses “in the field” when they only had internships there, according to court documents.
Westwood College settled the federal case in April for $7 million and denied any wrongdoing.
The peer review process is, Longanecker said, “insiders judging how well an institution does. You don’t go to Ford and ask how good the cars are. It provides very little for consumers.”
Christopher Lambert at the Accrediting Commission of Career Schools and Colleges disagrees.
He said his national accrediting group requires all schools to disclose program details, including cost and student- teacher ratio, to potential students.
“The important thing to us is that a school says, ‘This is what you’re going to learn. Here is all the information you need to make an informed decision,’ ” Lambert said.
STATE, FEDS DIFFER ON SCHOOL REGULATION
Colleges have found fertile ground to operate in Colorado because the state has not required much to open a campus or a storefront school.
That is evident in the numbers: 466 schools are authorized by state officials to operate here, yet the federal government allows only 112 of those schools to give out loan dollars and Pell grants.
In 2008, though, state laws were strengthened and state regulators gained a little more muscle to monitor the quality of for-profit schools. Before, state officials simply looked at the business plan, but now they investigate an applying institution’s quality, faculty qualification and admissions practices.
Since September, state regulators have yanked permission for two for-profit colleges and one vocational school to operate.
They now are investigating six student complaints against Westwood’s school loan program and its admissions representatives, said Karakoulakis of the state Higher Education Department. The complaints include allegations the school enrolled students in its high-interest APEX loan program without their permission, he said.
Westwood officials said no student would be enrolled in a loan program without signing an agreement.
“We feel like the college will be vindicated across the board,” Ojile said. “There is nothing to any of those issues they’ve raised.”
Even as the state and federal governments take a harder look at for-profit schools, observers point out that the reason so many are thriving is because they fill a free-market hole left by public community colleges.
“I think there are good and bad actors in the proprietary (for-profit) sector, and I think there are good and bad actors among community colleges,” Longanecker said.
Colorado’s community college system is cash-strapped. More than 50 programs in 13 schools, from mortuary science to nursing, are full and putting students on wait lists. Enrollment this school year is up 19 percent from the fall of 2008.
System president Nancy McCallin can only afford to hire about half of her professors full time. The rest work part time and are not usually able to send a text message to students when they miss a test or multiple classes — the kind of service many for-profit schools provide.
But McCallin would still rather see the students come her direction.
“We don’t load our students down with debt,” she said.
Danielle McGuire, who just graduated from Heritage College with an associate’s in massage therapy, would like to have gone somewhere less expensive. But the nursing program at Emily Griffith Opportunity School was full.
Today she is more than $10,000 in debt from the degree, but she found a job in her field at a chiropractor’s office. She got the job from a required internship set up by Heritage College.
“It was expensive,” said McGuire, who hopes to work in massage therapy as she attends school to be a licensed practical nurse. “But it worked for me.”
Staff writer Greg Griffin and staff librarian Barbara Hudson contributed to this report. Allison Sherry: 303-954-1377 or asherry@denverpost.com
Some of Colorado’s for-profit colleges
Heritage College
Degrees offered: Certificates; associate’s
Student population: 966
Tuition and fees (2008-09): $21,523
Students receiving financial aid: 92 percent
Graduation rate: 59 percent
Three-year student-loan default rate: 23 percent
Platt College
Degrees offered: Certificates; associate’s and bachelor’s
Student population: 199
Tuition and fees (2008-09): $24,150
Students receiving financial aid: 91 percent
Graduation rate: 58 percent
Three-year student-loan default rate: 14 percent
ITT Technical Institute Thornton
Degrees offered: Associate’s and bachelor’s
Student population: 1,389
Tuition and fees (2008-09): $16,356
Students receiving financial aid: 90 percent
Graduation rate: 46 percent
Three-year student-loan default rate: 27 percent
Everest College Aurora
Degrees offered: Certificates; associate’s Tuition and fees (2008-09): $12,747
Students receiving financial aid: 86 percent
Graduation rate: 38 percent
Three-year student-loan default rate: 36 percent*
*The Aurora campus is part of a group of three Everest schools that have a combined three-year default rate of 36 percent.
Colorado Technical University Colorado Springs
Degrees offered: Associate’s, bachelor’s, master’s and doctoral
Student population: 3,598
Tuition and fees (2008-09): $11,665
Students receiving financial aid: 77 percent
Graduation rate: 17 percent
Three-year student-loan default rate: 22 percent
CollegeAmerica Denver
Degrees offered: Associate’s and bachelor’s
Student population: 416*
Tuition and fees (2008-09): $19,208
Students receiving financial aid: 99 percent
Graduation rate: 42 percent
Three-year student-loan default rate: 32 percent.
*In an interview, CollegeAmerica Denver executive director Nathan Larson said the school had 700 students at its Denver campus.
Sources: U.S. Department of Education; National Center for Education Statistics. Graduation rates are for first-time, degree- seeking students graduating within six years.
